Plummeting demand for cut and polished diamonds in the West and China has pushed some 20,000 workers out of work in the last one month in Surat, where 80% of the diamonds sold globally are polished.
Surat, the main centre of India’s diamond industry, offers employment to some 800,000 workers in its 4,000-odd cutting and polishing units. But work has been drying up, forcing the units to work at 60-70% capacity, said Damji Mavani, secretary of Surat Diamond Association (SDA). It also means fewer workers are needed.
“Fear is looming large in the diamond city of Surat whether the recession of 2008 will be repeated this year too,” said Bhavesh Tank, vice president of Diamond Workers Union, Gujarat. “Orders are fewer and so the workload is less. Therefore, the units are reducing workforce. Some units are cutting down work days so that they do not have to pay the workers on days when they are not working.”
According to Tank, nearly 20,000 diamond workers in Surat have lost jobs in the last one month.
The US is the biggest market for cut and polished diamonds, followed by China.
India’s diamond exports began slowing in November last year. According to data from the Gem & Jewellery Export Promotion Council (GJEPC), overall gross exports of cut and polished diamonds in the April to November period of FY23 declined by 5.43% from the year-ago period.
Another reason is the dropping price of the polished pieces. While the price of rough diamonds continues to be high, that of the polished ones have softened due to low demand, which is impacting the margins of diamantaires and forcing them to reduce workforce.
Mavani of SDA said the workers who have lost their jobs will find work in other areas. “There is a 30% vacancy in most of the factories,” he said.
However, there’s an air of uncertainty in Surat due to the fear of recession in the US, Europe and China. “We do not know when the situation will improve. It may take one year for a robust uptick in demand from overseas markets,” the SDA secretary said.
“With the pandemic in China making a comeback and there are no signs of respite from the war between Russia and Ukraine, inflation soaring in some parts of the world, we are out there for some tough times,” said Vipul Shah, chairman, GJEPC. “The last quarter of this fiscal year is very crucial as it demands strong growth to achieve this year’s target of $45.7 billion.”
Shah said the drop in price of polished diamond is eating into the margins of traders.
Traders said business in polished diamonds is also sluggish because of the seasonal lull, lingering economic uncertainty, and the slowdown in China. Although China eased its Covid-19 lockdowns last month, another outbreak stifled the recovery ahead of their Lunar New Year.